Local investing

IT’S Friday evening, and four residents are sitting around a broad wooden table in Thornbury, talking money. They’re at the regular monthly meeting – bring a plate – of the “community economics” group from Transition Darebin.

The organisation is part of the worldwide Transition Network, in which local volunteers begin to “adapt to diminishing resources and a rapidly changing global climate”.

The March meeting was held at Serenity Hill and Kirsten Larsen’s house. They’ve already retrofitted their home – solar panels angle down the north-facing roof and veggies grow in their front yard – so Ms Hill reported on their latest sustainability scheme: self-managed superannuation.

“We’ve done all these other things – our lifestyle and even our work – everything is about trying to change the world,” she says. “It doesn’t feel right for our money to be locked up doing stuff we don’t control. Between us, we have $100,000 and we can now decide where it goes.”

They began investigating self-managed super after the global financial crisis. “We worried that it could easily vanish. We wanted to get it out of that system and also, to invest it in concrete things in the community.”

Self-managed superannuation doesn’t get much press, but it comprises nearly a third of all super assets. Until now, it’s been the province of the wealthy – the rule of thumb is that it’s too expensive to be worthwhile unless you have more than $200,000 stashed away. (In June 2010, the average self-managed super fund was worth nearly $900,000.)

Ms Hill found a way around the high costs. They use an online business called Esuperfund, which provides streamlined documents for $700 per year. There can be up to four members in a self-managed fund, so they can split the fee between them.

The couple haven’t decided how they’ll invest all their money, but they’re considering options: a community solar energy project, a small share in a dairy farm in the Goulburn Valley, and taking a commercial lease to house a local food hub.

“On the Australian Tax Office website there’s a long list of things you can and can’t invest in,” Ms Hill says. “You need to have a well thought out, audited investment plan. If you’re going to do it, you need to take responsibility to do it properly.”

Their plan is just what US economist Michael Shuman is promoting. Last month, the author of Local Dollars, Local Sense spoke in Melbourne and Ballarat about finance and local prosperity, sponsored by the two councils.

In Australia, he says, small businesses provide two-thirds of all jobs, but receive precious little investment. Most rely on debt for funding, which adds to their costs.

“Your whole system of superannuation is a massive subsidy for capitalising global companies to the disadvantage of local business – even though we know local businesses are more common and more likely to produce jobs. It’s a terrible skew in the system.”

Local businesses are better options for green-minded investors, he argues: they tend to buy inputs and sell locally, so their products have a smaller footprint; and they’re less likely to flee at the prospect of strict environmental standards.